tv Squawk on the Street CNBC April 15, 2010 9:00am-11:00am EDT
unclear what we're supposed to read into it. >> okay. well, regardless, the dow is up five straight days, 21 of the last 28. we're on a heck of a streak here. during that time, the dow was up more than 5%. the s&p up more than 6%. kospi also up 12 straight days. we're on a roll. it's been slow, but it's been steady. so is the nasdaq in the last 26 sessions. it is up more than 7%. let's hit the markets, because we're looking a little lower today. we'll start with bob. >> and the stock market futures fluttered a little bit as we got the weekly jobless numbers came out. they were a little bit on the disappointment side, but futures have come back to where they were prior to the announcements. the important thing now, the wall of money is continuing to come in. traders say they're continuing to see money come into the stock market. that wall of cash is very difficult to fight against right now. we have three freight companies say the shipping business is
improving in the last 24 hours. u.p.s., the most important of them. they boosted their guidance for the whole year. their earnings above expectations, trading up about 4.5%. another big deal in the energy sector, companies are buying each other with regularity now. mariner energy, big oil and gas producer, independent, being bought by apache. apache needs more access to gas and the gulf of mexico and they're going to get it. finally, delinquencies continuing to fall at capital one. we're getting the credit card numbers this morning. i'll have more on that next half hour. tradertalk.cnbc.com. bertha, how's the nasdaq looking? >> hey, bob, intel continuing to extend its gains. looks like it's set to hit a fresh, new high today, right now trading up about 1%. some of the big caps are benefiting. activision, not too sure about this quote here. the company had boost its outlook for the full year and for the first quarter, saying that the early launch of the map pack 4 call of duty 2 world of warfare, if you're into all of
that, boosted their sales. we'll take a look at that quote once again. it had been trading about 3.5% higher. jb hunt also higher this morning after an earnings beat. they're upping the price target to $43 there. we're continuing to hear from companies saying that things are looking better in the economy. aruba networks this morning is getting cut to a market perform over at bmo capital. it's down about 3%. where cepheid is getting cut at thomas weisel, yet they boosted the price target as they cut the stock. now let's head down to the nymex with sharon. >> oils and metals prices are lower right now. we are looking at oil prices here at the nymex hovering around that $86 level, actually, a little bit lower than that right now. keep in mind, we are continuing to watch the euro as well, and the euro has slipped against the dollar here as greek fears continue to re-emerge. we're looking at a little bit of a mixed picture in the energy market with some of the products getting little bit of -- gaining a little bit of ground right now. but the big story that traders
on the floor have been telling me about is about this divergence between brent crude and nymex crude prices. it continues. brent crude continues to trade at a premium to nymex crude, and although we saw in yesterday's inventory report a decline in oil supplies overall, curbing supplies continue to increase, and that seems to weigh on the nymex crude prices, even overshadowing at the nymex the positive data about china's gdp growth in the first quarter. to rick santelli in chicago. >> thank you. initial claims were up 24,000, continuing claims up 73,000. a lot of other nonseasonally adjusted numbers were up as well. what does it mean? well, we're trying to push it back a bit because of the holidays, distortions or seasonalities, but in the end, it isn't good news and we need to keep monitoring the jobs creation market. hey, treasury international capital flows, two months in arrears. february just came out the top of the hour, and it's pretty good news. if you include all the nets, including long and short-term securities was up $9 billion, and last month revised, even
though down much less, it was minus 33, it's only minus 10.2. if you just look at long-term securities, $47.1 billion versus $15 billion last month. february was good. remember, we had a refunding, so foreign ownership continuing to move up in a variety of sectors and we'll continue to break that down. we have 9:15 eastern numbers coming up for you. erin, back to you. >> on the tick numbers you're going through, one thing stands out. japan's holdings up in terms of treasuries by $3 billion. china, though, down again $11.5 billion, which they're still the largest, but they had net sales obviously in january. now net sales have doubled january of $11.5 billion. any concern there or still too small to matter? >> well, you know, everybody, of course, is going to handicap what it means for china. there's been several months where portions, short-term securities have moved lower in their investment regime, but i don't think that that's going to give you any clues. i think the chinese will continue to purchase our securities. it's just a question of price,
in my opinion. >> all right. well, thank you very much. we gave everyone all the headlines they want on the tick. let's move to united parcel service, because that really was the big story here. bid higher this morning. the company boosted its earnings guidance. according to s&p's rich peterson, that is the biggest earnings surprise in 11 years. what does it mean for the economy? don brodden joins us from avondale partners. how much of a surprise was this for you? >> well, it was a surprise for me. in retrospect, in 20/20 hindsight, it shouldn't have been, but u.p.s. has significant exposure, about 20% of their business is international, and international air freight has literally returned to pre-recession levels. >> so, international air freight at pre-recession levels, and when we think about international air freight, we are thinking about, well, things that don't weigh a lot, because things that weigh a lot go by ship. so, we're talking about electronics, things consumers buy, right? >> we're talking about
high-value, low-density type of items, exactly right. so, when you look at the first preannouncement and beat by fedex several weeks ago or you look at the preannouncement by u.p.s., they're focusing on two things -- one, global trade. i'm very fond of saying that the fastest rate of growth of any economy with the most reliable rate of growth is not the economy of any one country but is the economy of global trade, one. two, the fastest growing part of goods flow is high-value, low-density. so, what you've got is both of them. >> and don, briefly, before we go, of u.p.s., of landstar, which one of the truckers that reported today, of jb hunt, a trucker that reported, all better than expected, would you buy any of them today at the open? >> oh, absolutely. we are big fans of what jb hunt and landstar are doing. they are big beneficiaries of the tightening of capacity in the u.s. trucking market and the resurgence that's happening at a slower pace right now than international freight, air
freight, but will catch up, and that's truck freight in the u.s. >> and literally in a word, u.p.s., buy or hold at the open? >> i'm not a fan. i prefer fedex as a better way to play. more exposure to international air and more profitability there for them. >> all right. don, thanks very much. mark? >> my pleasure. >> thank you very much, erin. i'm on the floor with the hardest working man on the floor, warren meyers, walter j. died, also official cnbc contributor, and today you get a twofer, folks. we also have steve standing by in san fran at wedbush. i'll start with mr. massocca, because he got up earlier than the rest of us. steve -- >> good morning. >> we continue to grind higher. is that going to continue? >> well, i think it will continue for a while longer, and i think what's going on here is the economy has gotten tremendously better over the last few months, but corporate cost structures are very, very lean coming out of the recession. so, all these new revenues coming in because the economy's improving is going to drop straight through to the bottom line, and i don't think wall
street estimates have quite caught up with that yet. now, at some point, they will, but not yet. i think you have to look for a period of time where the market stops reacting to good news. we haven't seen that yet. the market continues to move up when we get pieces of very good news. >> warren, what about it? this is kind of the energizer bunny of rallies. this keeps going. >> it is, and you know, the term i've heard and liked a lot is this is a reluctant rally where a lot of people don't want to believe it. they've missed the boat. they're kind of waiting for buying opportunities on the sell-off and it continues to go up. as you said, grinds itself up and up, and i think that's going to continue through this earnings season, but i think when you get into next quarter's earnings, you're going to start to get to that point where it's going to be a little bit tougher now, as it was just said, to, you know, all that profit that, all the money that's been coming in is going right to the bottom line now. it's going to be a little bit more difficult to do that. the numbers, they're going to be compared to next quarter are going to be a little bit higher, and i think you're going to start to see that leveling out at that point. >> all right, gentlemen, thank you for sharing your thoughts.
steve massocca in san fran and warren meyers right here. back to erin. >> all right. let's get to steve liesman to talk about the weekly jobless claims, a lot worse than expected. what can we read into them? steve knows and is in north carolina at a key fed conference. steve, good morning. >> i love the way you build me, erin. such high expectations. i'll see if i can fulfill that -- >> i trust you completely. >> i appreciate that. economists are calling this number disappointing, calling it an absolute surprise, but the government is saying it's an infestation of rabbits in the data. i'm going to get to that in main. first, let's look at the top-line numbers. 484,000. that's plus 24,000. economists were expecting a decline down to 445,000. what number are you looking for? the last time we created jobs in this country, jobless claims were 325,000, 350,000. so, if that's where we need to go, we still have a long way to get there. take a look. you can see we've been coming down since around the middle of this year -- i'm sorry, the beginning of last year. jobless claims have been coming
down. and they had been down four of the past five weeks. now we're putting together two weeks in a row of gains, and essentially, guys, we're wondering, hey, is this rebound in jobless claims, is the return of job growth in this country, is it now under question? let's take a look now at a quote from a labor department economist who said, and i quote here -- oh, we missed it. basically, he's saying that you wouldn't read into it that this is the information from -- is not economic factors. these are seasonable factors, essentially, coming from easter. whatever the actual reason, there is still 11 million americans in three separate programs receiving unemployment claims, and economists are telling me that the philly fed at 10:00 is probably more consequential for the market and views on the recovery than this number. they're willing to give it a pass. but i tell you, if it's not positive next week, if things don't improve next week, there's going to be a lot of doubts about the jobless recovery.
and tune in at 10:00, when we have an interview with john dugan, the controller of the currency. i've read his speech. there's going to be news in there about banks and how well they're performing. then at 2:00, we have jeff lacker. erin and i will be interviewing him, the richmond fed president. erin and mark? >> we're excited about all of that, steve. we'll see you soon. next, more on hiring, including some predictions on when those jobs will come back in light of steve's concern there. plus, two secret sectors. stocks off the radar showing big moves. and tax day in america. what's the best fix for the tax system? flat tax, national sales tax, millionaires tax, gas tax, vat? >> no tax. >> no vat? that's not on the list, i'm sorry -- oh -- >> that is. >> value added tax, yeah. all right, "squawk on the street" -- didn't you tell me that was not the address for this poll?
yeah, that is wrong. the address for this poll is cnbc.com. and watch "taxing america" at 1:00 this afternoon. >> by the way, mark, a vat goes on top of your income tax and local sales tax. it is not a replacement. it is on top of. >> what, the vat? >> yes. i just want to make sure people don't think it's a swap. it's an extra. we'll be back.
welcome back to "squawk on the street." yes, there are more data points today! march industrial production was up 0.1%. this is much less than people were looking for, but we did have a positive revision last month from up 0.1%, up 0.3%. capacity utilization at 73.2% was close to what we were looking for and it really has moved up nicely. originally reported as up to 72.7%. that was revised to $73%, and this number takes us to 73.2%. did it have an effect in the marketplace? not so much. many investors thinking about erin's question, which was fourth month in a row china in some form of its portfolio liquidating treasury investments. they're always the biggest and we're monitoring who's going to buy our debt because we have
such a large amount of it to sell. >> thanks, rick. jpmorgan says they will hire 9,000 employees. intel planning to add another 1,000 to 2,000 this year. is this the beginning of a hiring rebound? are we on the road to recovery in the jobs market? john challenger, ceo of challenger gray, a global out placement firm, and joe labornga and cnbc contributor. joe, i'll start with you. when will we see meaningful recovery in the labor market? >> mark, i thought it was going to happen last month and we were completely wrong. i think it is still coming. i am troubled by the claims numbers because they're a very good gauge of activity, but i am heartened by what major companies are saying. i still think it's coming and it will occur before the end of spring, and i'm sure when we get that big job number, the market inevitably will miss it. >> john, you're in the middle of it. when do you think we'll see it?
>> i do think it's coming soon. we're poised to see job growth. it's certainly not going to come all at once. we are going to see, you know, occasional numbers that go the other way, like these jobless claims. so it's a three steps forward, two steps back process, but we are seeing turn-around in the job market. the layoffs have been very low now for five months consecutively, at a time, in fact, when layoffs are often at their heaviest. >> john, the last two recoveries have been, at least at the beginning, labeled as jobless recoveries, and certainly, the growth in jobs in the last two recoveries was below what we're used to in past decades. is this recovery like that, is it the same result? has the economy changed so much thanks to the internet and technology that we're just not going to see strong job growth? >> well, i think companies today, with all the metrics, their ability to really look at their numbers, they're going to react very quickly when they see
the business start to go up, they see their demand go up. they aren't going to get way out ahead of it like they might have in the past. they'll go in, hire temporaries first, and we have seen several consecutive months now of growth in temporary jobs. as they begin to then say this recovery and our businesses, our particular businesses are for real, then we're going to add more jobs, we're going to turn those people into permanent workers. we did see positive 162,000 jobs last month, and that was a strong number. >> mark, i'd like to just add something to your question. i think there are two big differences between now and the last two jobless recoveries. one, we've gotten a much stronger recovery in capital spending. and related to that, we've gotten a much stronger recovery in corporate profits. so, profits per worker right now are very high. >> you know, john raises an interesting point. and joe, i'll ask you the question. let's say someone is hired as a temp and then morphs into a permanent employee. is that captured anywhere in any
data? >> yes. it will be -- originally, the person's working for out placement firm, they'll eventually show up on the payroll for that firm, depending on the category. so, you would lose the temp worker and if it's financial services, you would show up as a financial service worker. >> john and joe, thank you for your thoughts. appreciate it. >> thank you. time for market movers. back to hq for some nesto nuggets. and as an aside -- >> nesto nuggets? >> i guess that's what we're calling it. >> like -- >> like chicken -- >> never mind. >> i don't even want to know what mark is thinking, but matt, you did an analysis of this hiring and what's in the existing workforce. it's nice, but it's not huge. >> i believe in the full disclosure, right, 9,000 on 225,000 at jpmorgan is, what, like about 4%, and it's about 2.5% of the 80,000 or so at intel. so, you know. and i think hr people would tell you that's probably normal
attrition rates in terms of the companies of that size. so, let me tell you about my other little thing i'm working on here today. it's the trifecta transport thursday, folks. of course we've talked about u.p.s. and their big preannouncement, but we have got two other transport, dow transport members, out with stronger-than-expected results. jb hunt, the first quarter beats by a mile. their intermodal or so-called truck-to-train business was up 20%, and they're upgraded to out-perform this morning at fbr. and dow transport member number two that's higher is landstar. i always think of landshark. i think they should change their name. landstar. landshark, remember? candygram. anyways, 42 cents versus 32. they also guide higher for the second quarter and their price target is raised this morning to $50 at rbc capital. the maker of olympic and pittsburgh paints and stains also trading higher here today after easily beating on the first quarter, but they're still a little bit nervous about the
underlying demand in their businesses. you can see pittsburgh paint, ppg, in the s&p 500 looking to add maybe a buck at the open. erin, back to you. >> thank you, matt. nesto's nuggets. next, the big turn-around in the auto industry you're not hearing about. >> futures off their -- no, they're not. in fact, they've sunk a little bit lower. we're counting you down to the opening bell. we're back in two minutes. don't go away.
looking like a lower open. s&p minis right now. minis also down, but not as much as the big contract. not sure whether that represents a rally. those two usually trade, you know, one -- >> right. >> i don't know. we'll see, i guess. >> that's why you've got to keep your tv tuned to mark haines. >> that's right. >> auto parts stocks, like autozone, genuine parts and o'reilly automotive have all been on a literal roll lately, all at highs this week. do they have more room to run and do they say anything about the economy? david silver is a strategist with wall street strategies. good to see you again. what do we read into this? some say, hey, these guys will do well when people aren't buying new cars because they want to buy replacement parts, so they will do well when there's more economic weakness than a strong rebound. is that the right way to see it? >> that is the right way to see it, and yes, people are going out to buy cars still.
incentives are high. people if they have the money will go buy that car, if they need it but most americans are still able to conserve that cash. they're willing to put that $200 to work in their vehicle right now instead of going out and buying a new car, keeping their vehicle up and running, so they're willing to go to autozone, go to napa autoparts and really invest the money that they have, spend the money that they have to keep their car running. >> all right. we're going to take a pause, tap the brakes here. we'll take a brief break, have you back and the open on the other side of it. futures pointing to a lower open after yesterday's big rally, 100 points. counting you down to the opening bell.
back there today because the airports are shut because of iceland's revenge. >> yes. the ash from the volcano in iceland is causing real problems for european air travel. at the nasdaq, k-mart, a subsidiary of sears, ticker shlv, celebrating its efforts for the march of dimes. >> by the way, for those watching anywhere overseas, heathrow, the world's biggest airport, just announced it's shut for the entire day. >> hundreds of flights canceled. >> i think 1,200 in title, just there. then you've got all the other airports. it just makes you thing how, you know, nature is a bigger disrupter of commerce, perhaps, than anything else when it rears its ugly head. and iceland is getting its revenge on all those ice save accounts in britain this morning. >> those of us who stick to trains, however, we're not affected. >> you're not affected. tunnel is operating? >> can still get wherever you want to by train.
>> mm-hmm. all right. >> on the ground. >> our market reporters are standing by. >> comfortably on the ground. >> let's get to bob pisani. bob, i know you've also been to that glacier where there was the iceland revenge. >> yeah, i know. isn't that a rather strange situation? i don't know when the last time we closed airports because of that. look, we're opening lower and it's because the jobless claims number a bit on the disappointing side. i would also say industrial production number's a bit disappointing. capacity utilization maybe a tad below expectations, but we're still moving in the right direction with capacity utilization here. i think you put this largely on industrial production, the weak open. let's talk about a couple of stocks. remember, there's a wall of money coming into the stock market. you're not looking if you don't see it. traders telling me clients just keep ordering more and more stocks in the last couple of weeks here. we have had three companies making positive comments in the freight business. this is u.p.s. right here. u.p.s. is opening nicely to the up side here. they raised their full-year guidance up $3 right now to $68.47. you heard about jb hunt,
landstar as well. freight shipments have improved in march. so, not just retail sales improved in march, freight did. the street's been long retail and long transports, and they have been right, arguing that the turn-around would start showing up here. whether it's sustainable or not, not clear, but definitely great numbers. mariner energy. we've been telling you about all these deals from the energy business. mariner energy, which is an exploration and production company for oil and gas, being bought by apache. it's a simple story here. these big energy companies are buyers of exploration and production companies right now. why? because they have better balance sheets than they used to, and number two, they can't grow organically anymore. they need to go out and actually buy companies. you are going to see more deals in this space very soon. finally, just want you to know, bank of america, capital one and discover, their delinquency rates are all improving today. we got the march numbers. i'll tell you more at the top of the hour. tradertalk.cnbc.com. bertha, how's the nasdaq? >> bob, the preannouncements keep coming. noevlis is boosting its outlook above the high end of its
previous range, but it's also revising its tax rate as well, so it's not getting as big a boost on the preannouncement. nonetheless, intel is opening here, if i'm not mistaken, at a fresh high, intel, which has languished for a while in terms of stock movement on the back of the great earnings reports. activision also not getting much of a boost after boosting its outlook as well. it's down more than 1.5%. zions bancorp, meantime, is up on an upgrade this morning. and jb hunt -- bob talked to you about it. not only is it boosting, it's also getting an upgrade from freedom billings ramosly, better known as fbr. also upgraded at leerink swann. and santarius is the stock of the day. it saw three patents thrown out. it is plunging today. let's head to the nymex and rick santelli. >> we're looking at so many directions on a day when there was quite a bit of data. initial continuing claims didn't look very good. we saw a capacity utilization
ramping up a bit. we saw a pretty powerful april empire index, which is a fresh number in the form of april. and in terms of exactly who continues to buy and be enamored with things like u.s. securities or stocks, we see that those numbers were pretty good. but the complexion of players may be changing a bit, and when you have a lot of supply to sell, the players are important. the chinese, four months running, have diminished most of the returns, but nothing earth-shattering. in terms of yields, they're drifting up a bit. we're getting close to 3.90 on the 10. but let's face it, there was a lot of exhaling when we didn't get over 4%. we don't have supply for a while. we'll continue to monitor the data. mark haines, back to you. >> rick santelli, thank you, sir. quick check on the markets for you right now. dow down 16.5. nasdaq down just a fraction. s&p down a point. so, we're backing up a little. we're all over the markets, but the latest fortune 500 rankings
are out. walmart leads the pack. rounding out the top five are exxonmobil, chevron, general electric and bank of america. should you bet on these big caps? let's get the information on the early tick. fred dixon, senior vp and chief market strategist with da davidson and company. also with us, carlo bonacconi, founder of navigation group. carlo, i'll start with you. >> good morning, how are you? >> is it time to invest in dead big caps? >> you know, we have been taking some of our profits that we've gotten in small caps over the last year and started to redeploy those toward some of the larger value in growth stocks. i think when you look at these large companies, they've got their hands all over the world. they've got their fingers in all of the pots and that's going to help them continue to grow. >> yeah, but -- okay. here's the thing. there's a difference between their business and their stock, and general electric, for
example, has been dead money for a decade. >> yeah. it has. i can't say -- you know, we're definitely focusing on managers that have the flexibility to be stock-pickers. i don't believe that this is the market where you can throw your money at anything and you're going to make money. you know, we had a big run the last year, but it's getting to a point where we're going to have to start seeing stock-pickers come to the table and really see what opportunities are out there. the flexibility's very important, and most of our clients are looking to lock in some to the gains they've gotten. >> fred, carlo makes a good point. small caps, smaller caps, have been the place to be in this rally. is it time to shift to the big caps? >> well, we've had an overweight focus on the big caps. look, all the way back. i was with you on march 9th a year ago. we talked about the haines become, we came up, talked about the small chaparraly there. we've shifted focus gradually from some of the more cyclical
smaller cap cycle stocks. in terms of the big cap names you flashed on the board with fortune, in those names, we're really holding with the companies that have histories of raising their dividends annually, consistently, and there are a couple names on that list that do, but i think it's going to be growth, it's going to be companies where we see analyst earnings estimates coming up and where we see the adjustments to those numbers in response to first quarter numbers move up even faster. so, balance and selectivity is our game. yes, we like some big-cap names, but we also think you have to stick with some of the more aggressive small-cap names. >> with regard to the dividends, though, do you give a pass to -- i mean, a lot of companies cut their dividends during the crisis. general electric, i don't know the exact numbers, but they had a great dividend record until, you know? so, do you give them a pass or count that against them? >> basically, we've been counting it against them. >> okay. >> there are a lot of big companies that were able to increase their dividends in the worst dividend increase period on record, and as i say, there
have been some interesting names. when a company passed on the dividend, we look at that as an event that generally doesn't get picked up by wall street, and it's an indicator or harbinger of not so good things to come. >> we want to mention one big-cap name everybody's talking about. let's go to bob pisani and get the latest on this name first. this name, of course, is citi, and a level at which maybe big institutions could start buying it again. >> and that's $5. smile mario! he's at the citigroup post. alan valdes is here talking about it. we're not there yet, but i noted yesterday there was a lot of call activity around the $5 stock price, meaning that traders seem to be somewhat bullish and is going to get over that. what, if anything, does mean? >> well, for traders, it does mean a lot. at $5, with the funds you're looking at, that's serious looks at it. when you think where it was this time last year, no one thought in their wildest dreams this stock would be at $5, this stock would be trading anywhere near here. so, that's good psychological sign, but it's also a good sign
for all of the financials, that citi is over $5. hasn't been here since 2009. >> i want to make clear your thought about the funds. much of the mute yul fundz are prohibited from owning stocks below $5. it depends on each individual one's charter at this point. >> but the majority, over $5, they can get involved in them again. >> now, the banks, of course, we're waiting for earnings. jpmorgan, a checklist of perfect things you needed to say from jamie dimon. >> reporter: across the board. they hit the ball across the park. we have bank of america tomorrow, citi next week. so we're looking for all these numbers. that's good. >> 3 cents away from $5 on citigroup. alan, thanks very much. >> thanks to you, bob. fred and carlo, you've had a chance to hear it and we've been watching it larl literally bounce around there. what do you say? >> first, we don't have active coverage, so i can't make a recommendation. what i would say is as a taxpayer, i love it at $5. we're making money and it's helping pay down our stake in it. we've got some momentum behind it, and you know, technically, if we go above $5, it wouldn't
surprise us to see that move a little higher. >> carlo? >> i'm in the same boat. we don't follow it, but as a taxpayer, it is exciting. you look at chrysler in the early '80s and we're starting to see we're making money back on some of the government investment. >> that's good. no one, i notice, though, mark, wants to hazard a guess whether it stays here or where it goes. >> still, we all own it, so that's a good story. >> true. >> fred and carlo, thank you for your input. appreciate it. >> thanks, mark. >> thank you. next, foreclosure rates still going up. where's the relief? where's the recovery in housing? plus, republican senator kay bailey hutchison and gubernatorial candidate in texas regulating wall street. how both parties can reach agreement. she'll give her view. and our street poll. mark, what's the best way to fix the broken tax system? we're giving you four choices -- flat, value-added, millionsair or hiking the gas tax. some of you will scream and say you don't want any of them. that's fine. please pick. and we do want to clarify. you should vote where you always
do on this show, squawkonthestreet.cnbc.com. >> my prediction, flat tax wins. with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here.
all righty. i don't know, can we say the tea party holding rallies? because, i mean, is there an actual tea party? it's -- >> i don't think so. >> well, i think their big thing is decentralization, et cetera, et cetera. but anyway, there is a rally of tea partiers, how's that? that is at least -- i think that's the most accurate thing to say. in washington today on tax day. the big goal is to pressure congress to ease the tax burden. the rally starts at 11:00 this morning. we're watching it all day on cnbc. it is, after all, tax day. your taxes are due or your tax returns are due today. >> and we have a special cnbc
presentation hosted by bill griffeth at 1:00 this afternoon. and a question for those tea partiers, mark. if they want the tax burden to go down, the spending burden would need to go down, too. >> right. >> so, are they willing to cut medicare? cut prescription drug benefit? cut -- >> well, that's part of the -- >> that's the big question. >> that's part of the -- what's the word? >> they say spend less, but they need to give specifics on where they would spend less and how much less. >> that's part of the inconsistency is no one ever comes up with, well, spend less on what? >> right. no, they do. we'll spend less on you, haines, but not me. that's sort of the way it usually works. >> okay. well, if we're lucky, glenn beck will save us all, because he's urging people -- [ laughter ] >> what is he doing? >> -- to not collect their social security or their medicare. >> well, hey -- >> if he succeeds -- >> then, let's go for it. >> if he succeeds, it will be great.
somehow, i just don't think a lot of people are going to do that. >> like, it's worth highlighting that the one thing that got the most bipartisan support this year was the 97-0 vote that if there were a deficit commission, medicare and social security would be exempted from its purview. >> well, it's easy when you're a multimillionaire, too, to tell people to pass on their social security and medicare. anyway, where are we going? we're going to auto parts stocks, because it's key to the economy. david silver's back with us with wall street strategies. you were making the point that these names -- we're talking about autozone, o'reilly, they do well when people aren't buying new cars. but we've been saying, oh, the economy's getting stronger. so, you should be able to see it in those names. are people really buying new cars instead of buying replacement parts for their old ones? >> yes and no. yes, you see people going out and buying new cars, all the incentives, as i said earlier. it's taking the people who can afford the car, they're going out and buying one. however, the people that can't really afford a car right now or don't have the credit score to
get the good zero apl, they' pa investing in their current vehicle to improve the fuel efficiency, cut costs any way they can. simply by replacing the air filter, improving the seals on the window, that will help you improve on fuel efficiency and push that dollar even further. >> sounds like you know how to do all this. would you drop by my house and help me out? >> i wish. >> so, where does that leave us with the stock? do we buy it? a say autozone? >> i still like autozone a lot. they have an excellent management team. i think the sky's limit for them. they have really been improving their cash flow structure, they have a strong balance sheet and they're growing across the board. genuine parts i have a hold on right now because their balance sheet isn't as healthy as it could have been. they continue to increase their dividend. i think it's 16 straight years of increasing their dividend. so, that's a healthy company, it's one that's going to be a steady, steady chart, a steady growth, whereas autozone, you're
going to see a lot of capital appreciation. >> we're out of time. i don't see pepboys on your list. >> i don't like pepboys. >> you prefer autozone. >> i prefer autozone. >> he gave an honest, direct -- wouldn't it be nice if analysts just said, no, i do not like it. rather than, it's okay, it's not always my favorite. >> which means we'll invite him back and beat him up if he was wrong. all right, let's get to matt nesto, another man who does not prevarocate. no. >> no nesto. we're on a roll this morning. have you noticed? >> so who's going to talk to who? >> wrong web address, no nesto -- >> who's doing "stocks on the move"? >> okay, guys -- >> you're going to read them yourself. >> you've got to tell me what we're doing here. oh, i'm doing it! all right. >> you buoyed nesto. >> i'm not nearly -- no. i'm not nearly as up to date on this as nesto, so we'll bring your attention to some "stocks on the move," starting with mgm following as it announces a
first-quarter loss of 22 cents. what is this, macerich? is that how you pronounce that? down almost 8% after cutting their fiscal year guidance and prices its secondary offering at $41. so, there you go. and my apologies to nesto fans. i miss him, too. >> we will get him back. a debate over how to re-regulate wall street. republican senator kay bailey hutchison is next. and, oh, boy, the viewpoint from a banking regulator. comptroller of the currency john dugan joining us live to talk regulation, reregulation, credit markets, rates and more. don't go away. well, look who's here. it's ellen. hey, mayor white. how you doing? great. come on in. would you like to see our new police department? yeah, all right. this way. and here it is. completely networked. so, anything happening, suz? she's all good. oh, my gosh. is that my car? [ whirring ]
all righty, check out citigroup. it's just short of $5 here. we were talking earlier, in case you're just joining us, that $5 is significant here because a lot of fund managers are restricted, can't buy stock that sells for less than $5. so, presumably, you get up to $5, you might get a whole bunch of new buyers for citigroup. all right, well, republican senator bob corker told cnbc he believed congress will end up with a strong bipartisan bill on
financial regulation, but this comes after republicans and democrats have failed to reach common ground on the senate banking committee's bill. both seeds seemingly more divided after meeting with the president yesterday. joining us from capitol hill is texas republican senator kay bailey hutchison, member of the senate banking committee. senator, mark and i were discussing, it's hard for us to imagine at this point what there is to argue about in this bill. everybody seems to say they support almost everything in it with incredibly tiny variations. why the bifurcation? >> oh, there is a lot in this bill that is either as yet undetermined or where we are in complete disagreement. this consumer agency, for instance, another layer of regulation. putting it in the fed, but the fed has no oversight, is a non-starter for republicans. we think that banks are well regulated, that we should have prudential regulators and not some new federal bureaucracy
that will have another layer of regulation in an area that was not a problem. so, that's a big one. number two is derivatives. of course, we're not at all where the bill is on derivatives. we know there needs to be derivative reform. this is very important, but we're not in agreement on that. and of course, i want to make sure community banks can also be a part of the fed. i think that is very important for the fed itself to have input from the rest of the country. so, we've got some disagreements. >> is there anything in this bill that says we will bail out wall street again if they get in trouble? >> yes. the republicans believe that the bill is not tight enough on the area of too big to fail. we want to stop too big to fail. and there is not a real dismantling of a firm in this bill that would put it out of
business but not at taxpayer expense. so, you could have taxpayer investment and the firm would still stay in business, which is what we've just seen, and -- >> well, do we need that in a bill? isn't that usually an ad hoc process? >> well, i think we have to be very firm in this legislation that too big to fail is no longer the policy or the law of this country. >> one thing that confuses me, though, is that people on both sides of the political spectrum and the financial markets seem to think that the most important thing isn't saying we're not going to have too big to fail, because it's almost impossible to legislate how that would happen until you know the situation, but what is possible is to say regulators are going to put in place the requirement for much, much higher cash on hand, which would prevent the banks from taking the risk in the first place. so, you prevent the crisis that way. why not go aggressively for that? >> well, i think that we can be aggressive in too big to fail.
i think we can do that part right. i really do. i think everyone is in agreement that we want no more bailouts and we want to be able to build up the reserves so that there is a private fund that is the insurance policy against too big to fail. but if you use all of that insurance policy and then the entity isn't dismantled and then it becomes too big and the taxpayers are called on once again to come in, that's the problem in this bill, which i believe can be fixed, i do. i think it's not tight now, but i think it can be made tight. >> senator hutchison, thank you very much. we appreciate your taking the time to be with us, ma'am. >> thank you. all right, another key interview on reregulated wall street or deregulating or however you want to phrase that. coming up after the break, comptroller john dugan on credit
welcome back to "squawk on the street." yes, we have more data. philly fed, and of course, this is a fairly realtime glimpse into manufacturing in that part of the country and philly fed survey should be out any second now. it still isn't out. the setup going into the data -- well, we have equities down a bit, we have interest rates unchanged and short maturities, they're elevated slightly in the long end. anybody see the number? here we go, 20.2%, 20.2%. this is close to expectations, arguably even little bit better. last look we had was 18.9, which was unrevised. so, like empire, but maybe not as aggressive, this fed survey is showing that manufacturing activity continues to be one of the mainstays, at least at this point, in the inventories cycle. erin? all right, rick, please don't go anywhere, but bob pisani's here, too. first, rick, could you give us context around the number? you're saying a little better
than expected. if you were looking at, i guess for lack of a better word, normal number for the fillet pd in a strong economy, what would it be other than the 20.2 you just reported? >> i'll tell you, it's very difficult to handicap where we think this number is going to be, but suffice it so aye thto one of the things when you have a big recession and compound it with a big crisis, of course, is all the slashing on inventories and manufacturing. i think many believe that, like empire, some of these indices have some big upside potential. this one definitely is stacking up some good numbers in a row, just maybe not as aggressive in the last month or so. >> went down to terrible numbers a year ago. negative numbers -- >> but if he's seeing significant upside in the index, what does that mean for all of the names, which a lot of the names linked to this have already come far with the stock prices. >> at the height, by the way, a few years ago, we were routinely in the 30s on the philly fed rate. i think the important thing about this, rick, third month in a row the philly fed has moved
to the up side. i think we did a 22 number four or five months ago, but i know we've been up three months in a row. so, it's moving in the right direction. same thing with capacity utilization. while it was maybe 0.1% below expectations, again, we're still slowly moving in the right direction, expanding on capacity utilization. industrial production numbers were clearly little bit of a disappointment. they're blaming it on utilities, things like that but that was a bit of a disappointment. >> and bottom line, rick, from your perspective, in terms of rates with the philly fed, with the utilization numbers we got, with the treasury buying data, rates holding right where they were, right? >> yeah. rates really haven't moved much, and of course, a lot of focus on mortgages, because at least at this point, the fed doesn't anticipate buying them, and we haven't seen a huge move there. we haven't gone above 4%. i think right now, manufacturing, many investors have it figured out. the bigger question is sustainability and the service sector. >> all right. well, rick, thanks so much. we appreciate it. what else are you looking at here? >> you know, we were talking a
few minutes ago with alan valdes of citigroup here, one of the things you want to keep an eye on. we're sitting essentially at the doorstep of $5 for citigroup. put up an intraday of citigroup. a lot of call volume and volatility around $5. that's a bullish sign here. traders are basically betting it's going over $5 at this point. remember, the last time citigroup was over $5 was back in 2009. it was october 2009 it was over $5. >> let me ask you just a question. you'll know the answer to this. so, you get to $5 and big institutions are allowed to buy it, mutual funds, but i imagine they don't want to buy it at $5 in case it dips back down. what would you say the pad is, or how does that happen? >> the charter is all different for these companies, but a lot of them do not allow them to buy stocks below $5. i think it gets comfortably over that into the $5.10, $5.25, you'll see institutional buying. what we are seeing is institutional buying across the board in stocks. there has been a wall of cash that's starting to come into the stock market, and that's why guys can't successfully short
the market. notice we had some disappointing economic news today. we were down 20 points on the dow. that is not statistically a significant number at this point. >> right. >> 20 points to the downside. it's that money that keeps coming in that's hard to fight. >> bob pisani, thank you very much. looks like retail investors are getting in and it looks like the nasdaq is actually in the green, bertha. >> yes, it is. we are trucking along here and truckin' is the key word. both jb hunt and landstar reporting this morning. both shares this morning are at fresh highs. jb hunt also getting an upgrade at fbr, up 5.5% on the back of that. and landstar is up nearly 6% and not only beat, but got a boost. again, seeing good signs in the economy. not getting a boost on raising their outlook is noevlus and activisi activision, although novellus did hit a fresh high. both are trading off after boosting their outlook. but take a look. we are still moving winnel effect. intel at a fresh new high, getting close to the $24 mark,
where it hasn't been for an awful long time, along with others on the wall. yahoo! joining the usual suspects. erin, up five. high five, up top for the big caps today. >> five is another key today. they're up five, citi's getting close to $5. we'll see if it will be a lucky number. let's check on energy. crude oil right now is up 21 cents, $86.05. no relief there, and that obviously has implications for all of us. sharon epperson has the inside track. sharon? >> well, erin, everyone wants to know, what's opec going to do about this? we have oil prices here approaching $87 a barrel. once again, it looks like. and how high do prices have to go before they're going to step in? today, squat quait's oil minister said opec may consider boosting oil production if oil prices are over $100 a barrel. so, we still have a little ways to go here before they step in, according to kuwait's oil minister. we are looking at brent crude prices, though, that are trading at a higher presumium to nymex crude prices and the opec basket
price. brent crude is over $87 and the opec basket price is trading a little over $82 a barrel as of yesterday. of course, nymex crude prices right around this $86 level, but what traders here on the floor are watching are the spreads. not only the brent wti spread, but also the spread, the crude curve for nymex crude prices, and it continues to blow out. we're looking at november. crude futures, though, over $90 a barrel today. so, we're approaching that level, mark. back to you. >> all right, thank you very much. now, back to steve liesman, senior economics correspondent. talking with some of the most influential names in backing at a key fed conference, including the comptroller of the currency. steve? >> mark, thanks very much. i am here with john dugan, the comptroller of the currency, who for our purposes this morning, most importantly, is the primary supervisor for eight of the ten biggest banks in the country. mr. dugan, thanks for joining us. >> thanks. pleasure to be here. >> so, in your speech coming up later this afternoon, you're going to do what i see as one of
the first assessments of how well the banks under your supervision have performed relative to the stress tests. >> that's correct. >> tell us what you find. >> well, what's interesting is that the stress test, of course, was a very severe test, and what the results are showing is that the losses are really not nearly as bad as what the stress test would have shown. and that's good for two reasons. one, things are better, but also, it means that the banks that have raised capital to deal with the worst-case scenario now have even more capital to deal with a better situation. so they're stronger. >> how much better? is it by the hair of their chinny chin, chin or better in what assets? >> it's really across all of the asset classes that the losses are not as bad as they were predicted to be in the adverse scenario. and it's by a significant amount. >> i notice looking at your chart that first mortgages were one of the ones that were the most -- performing the best. what else is out there? how about credit cards? >> well, i think there's two
things you've got to be careful about. these are compared to what we assumed in the stress scenario. that's different from saying how they're doing now relatively. i would say relatively now, cards are showing signs of performing better, whereas mortgages still have problems in them, as do home equity loans. >> somebody might come up and say, you know what, so we didn't get the loss expected in the first year, they're maybe going to come in the second year. is that possible still? >> we are halfway through on the numbers you're seeing and now we're through another quarter, and nothing that we've seen preliminarily changed my conclusion and what we have in the data. >> now, one of the things that's out there is also revenues seem to be doing better. so, there's two sides to this -- >> that's right. >> -- the balance sheet. talk about bank revenues as well. >> on the revenue side, they, too, have been better than the depressed revenues that were predicted in the adverse stress scenario, and significantly better. >> the big fight right now in congress is over too big to fail and whether or not the dodd bill does actually reduce the chance or keep the government out of
too big to fail or ends up being a sort of government institutionalized bailout. do you have an opinion on that? >> you know, i think that there are some issues that both sides are talking about. my hope is that they -- and i think there is still hope for this -- that they will reach a bipartisan solution that a broad swath of congress can support and we can get this enacted into law. >> just want to go back to what you're seeing on the books of the banks right now. what's happening right now with credit card delinquencies? >> the early-stage delinquencies are showing signs of improvement. loss rates, losses are still up, but those early-stage delinquencies definitely look better across the board. that's a good thing. as i said, however, on the mortgage side and on the home equities side, we're not seeing that turn yet. foreclosures are still likely to be quite high as we get through the year. >> john dugan, thanks very much for joining us this morning. erin, back to you. john dugan saying that looking at how the performance of eight of the ten biggest banks under the stress test, they're running better than expected. and just real quick, on your philly fed, we're running about where we should be for an expansion on the philly fed
index level. erin? >> all right. steve, thank you very much. we look forward to being with steve to talk to jeff lacker about the fed and the economy coming up on "street signs." meantime, citigroup, did it actually get there? it did. it got there, mark. >> $5! >> it got to $5. i don't know if it's holding it. jeff harte is managing director of research at sandler o'neill. here we are. jeff, we've been talking about this level being so crucial, the big institutions are often by charter allowed to buy a stock once it reaches $5 a share. the key question appears to be, how much above $5 does it need to go before they really feel comfortable to buy? because that, you know, once they buy, it could really go up. so, could you answer that question? >> well, i mean, that's clearly the key for citigroup to go up. a lot of the big institutions are going from underweight to at least equal weight, god forbid overweight. i actually think the $5 share price is kind of exaggerated. a lot of times, depending on liquidity and market caps, the
$5 isn't such a crucial point. so, i mean, i think a lot of the institutions that don't own it right now have chosen not to own it as opposed to kind of been prevented from owning it due to their charters. >> also, you can't short a stock below $5, either, right? so, at $5, you've got all the lovers and the haters all coming in together. >> yeah, and it's -- you know, the key, i think, really is, the stock moving up for whatever reason, but for those that are underweight a citigroup, as it continues to out-perform, you know, that gets awfully painful on performance metrics. i think as the stock kind of moves up, it's going to start drawing some more attention from institutional investors. i mean, i think bottom line, there's two things to like about citigroup. one is there's a real business there, and two, i don't think people fully appreciate it yet. it's still kind of viewed as toxic assets. and i mean, i think that part of its history is kind of passed. when people take a closer look, i think there's a lot of stuff to like there on the fundamental basis. >> so, you'd be a buyer and you
think it's going higher? >> i think it's going higher. i don't know that it's going to be a $6 stock tomorrow, but i mean, i think you look out over the next six, eight months, i definitely think citigroup's going to be north of where it is here. barring those going into a double-dip recession, but guess what? if that happens, i think you're going to have less down side to citigroup because it's still pretty attractively priced on tangible book value based on other stocks you could buy out there. >> let's bring in bob pisani. he has thoughts to share on citigroup. >> i guess my question to jeff here is, we've got a stock with 28 billion shares outstanding and the government owns 7 billion shares, jeff, and they've said they're going to dispose of that this year. what kind of overhang is that for people who are considering buying it right now? >> well, i mean, that's certainly overhang. it's certainly something the market's worried about. but getting back to what if the institutions actually decide to engage -- if institutional investors go to the same level of ownership in citigroup that
they have in competitors like bank of america or jpmorgan or wells fargo, i mean, that's significantly more than 7.5 billion shares. so, institutional investors going to equal weight could take the government out of their position pretty quickly. >> it's a lot to move, though. 28 billion shares to move $1, $2. i mean, people who are calling for this thing to be $10 or $11 soon, don't you think are kind of pushing the envelope, given the sheer number of shares that are out there and the secondaries we know are going to be coming from the regionals, they're going to need to raise money fairly soon. >> yeah. i mean, i'd love to see a $10, a $11, a double-digit citigroup stock, but start thinking that way, i think you're definitely getting ahead of yourself. even just to move from $5 to $6 would be a nice up side from here. you know, longer term -- i mean, i'm kind of bullish on how the economy's going to play out, how credit's going to play out, investment banking and capital markets are, and those are all
things that citigroup is exposed to. so i mean, if the environment's favorable, citigroup should be a stock that bodes pretty well. >> thanks very much, jeff. >> all right. thank you very much, sir. >> okay. just ahead, two rivals, two very different stock moves. pp&g up 58% over the past year, while monsanto sits near its 52-week low. which should you bet on now? plus, we're looking for the next big takeover target. >> oh, and then guess who's coming into our show? our co-anchor david faber. >> the brain! >> he's coming into the show, talking to one of the biggest names in m&a, doug braunstein from jpmorgan. and later, a secret sector soaring. and some of the biggest movers this morning as we go to a brief commercial. we're down only 12. 11,110 is the level. teradata is the biggest mover.
we're live from the financial capital of the world, in the heart of lower manhattan, "squawk on the street." and here's what's moving. about 45 minutes into the trading day, citigroup, by golly, it hit $5 a share. key price for mutual fund to buy. u.p.s. big winner on the s&p. up about 6% or so after posting
much better-than-expected earnings and offering an optimistic outlook. that's sending shares of u.p.s. to a fresh 52-week high along with rival fedex and yum! brands, also at a new one-year high. >> and the s&p has just ticked into positive territory. dow still down 11, but you've now got two out of three. s&p and nasdaq trading higher. matt nesto was working on something else. we want everyone to know he is loved before our show. he's busy. he's too good for us this hour, apparently, so we'll read the stocks on the move. charles schwab reporting a drop of 45% over the quarter. they're saying trading was simply sluggish. that's what hurt them. results are in with its own worst-case scenario forecast. mgm mirage says it expects to report a first-quarter loss of about 42 cents a share, wider than anticipated, partly because it wrote down the value of that city center development for a second time. and with transports in focus, look at landstar.
we spoke about this. better than expected for the bottom line, 24%, in fact. and they said they had an increase in the number of loads hauled. ppg industries is also another big mover out with earnings this morning, beating the street with a $30 million profit. stock up over 50% over the past year. mark, rival monsanto trading around a 52-week low. which stock is better for your portfolio, mark? >> i don't know. do you buy ppg as it moves higher? do you buy monsanto as it falls? frank mitch is with bb&t capital markets. frank, good morning. >> good morning, mark. >> so, what do you do? do you ride the winner or do you bottom fish? >> at this point, we'd be riding the winner. ppg has done so much correct over the past 18 months. i think one of the keys is that they were among one of the first out there to realize how bad the destocking phenomenon at the end of '08 would be and the weak
economic environment at the early part of '09 would be. so, they did something that was ahead of others in terms of taking costs out, letting folks go even in korea and in china. they did something in the states. they furloughed the head of their north american oem coatings business for three weeks in the first quarter of last year to send a signal, it's not just indians that are getting put back, cut back, it's also some chiefs as well. so, they set up their cost structure such that when buy-ins come back -- and by the way, buy-ins in that business were up 30% year on year. when buy-ins come back, earnings come back. so ppg is doing a lot of right things and we're heading into their seasonally strongest quarter, the second quarter, so we think earnings will have to move up here off of this upside surprise. >> conversely, is monsanto doing something wrong? >> well, monsanto had been doing a lot right for several years. unfortunately, i think they've lost their way over the past six to nine months. they've made promises to the street that they haven't delivered on, and they've had to
come back and say, guess what, guys, you know when we thought we would earn so much money with roundup over the next couple years? cut that. >> really? >> yeah. they told me in june of last year -- no, i'm sorry, july of last year, when the all-star game was in st. louis, they said we'll earn at least $75 million in profit in roundup herbicide. that's the floor, can't get any lower than that. this year they're going to do $600 million. >> so, they weren't able to measure their own business. that being said, so they made that mistake, there's concerns about price-fixing in that industry, people don't like engineered products and that's what they do around the world. but with you know about all those things. so, maybe the stock's been beaten up and there's an opportunity. i'm just playing devil's advocate. >> i think if you've got a five-year time horizon when some of the next generation of drought-tolerant products, products that have omega-3 fatty acids embedded in them soez they're healthier for us, they're good for the consumer -- see, what monsanto's been doing now is it's good for the farmer,
but it gets lost at the end user level. so, i think down the line, things will be better for them. >> make it three in your corn, mark. >> sounds to me like you beat him into submission, actually. >> well, right now -- >> he said if i had to come up with something, omega-3 fatty acids. >> thank you. appreciate your time. appreciate your input. just ahead, making your tax -- believe me, i sit here every day. eventually, she'll get you to say whatever she wants you to say. making your tax return audit-proof. and stocks you probably never heard of almost doubling in value over the past nine weeks. it's a secret sector. >> ooh, the secret sector! kind of like the secret santa. >> mm-hmm. it's one of the biggest movers on the nasdaq, which is higher, led by dell and the mining company, mining equipment company, sorry, joy global.
hosted by the effervescent bill griffeth and produced by the effervescent rich carolyn. so, how do you audit-proof your tax return? lance is with a firm that provides business valuation and financial services to companies, financial adviser. so, is there a fool-proof way to audit-proof a return, lance? >> first of all, you have to think about your audit risk. and especially in the estate tax area, which is apropos for your client, your viewership, which is some of the richest people in the world. one of the things you have to remember is that just in 2002, there were 130 taxable estates for each irs estate tax attorney. that's come down to just 20 cases for each estate tax attorney for the irs. each irs attorney can handle about 30 cases a year. so, the audit rate is going up. now, each irs attorney handles also gift tax issues. so, that means if you have an estate over $5 million, your
audit risk has increased from about 27% in 2006 to about 80% to 90% right now. >> so, what do you do? >> so, what do you do? that's the real question. a lot of -- the number one estate planning technique is actually doing nothing, overpaying your estate taxes and not worrying about it. and that's exactly what one-third of all individuals do that have estates over $5 million. but if you want to reduce that estate tax in a legitimate way, you can do some estate planning techniques other than playing the audit roulette, because you're going to lose that game right now. so, instead of thinking about audit-proofing, what you start out with is understanding that you will be audited. so, the number one thing that you have to do is -- >> is pay up. >> -- is pay up and hire that fantastic attorney. and most states have designations for those specialties like estate tax. find those. if they don't have the specialities, organizations
specialize in estate tax. the most prestigious of all of those is aftec. if you hire one of those, you're home-free. >> thank you very much. we appreciate it, lance. good advice. that is always the bottom line, right? never play it close. always just play it straight. hunt for the next big takeover target, coming up. plus, the nat gas inventory report comes out in two moments. we've got that coming your way. good. this time, i'm watching fees like a hawk. i hate hidden fees. why should i have to pay for something that i shouldn't have to pay for? td ameritrade's pricing is clear and it's straightforward... it's spelled out upfront. no hidden fees... no bait and switch. no gotchas. and there's one flat rate for online equity trades... for big accounts... or small ones. that's the way it ought to be. time for fresh thinking. time for td ameritrade.
if you're wondering why natural gas prisions are coming off right now, it's because of the latest data coming out from the energy department just a moment ago. we got an increase in natural gas supplies of 87 bcf. that's an increase of 87 bcf. the consensus, according to reuters survey of analysts was for 77. the range was between 60 and 90. a lot of folks at the upper end of the range, but not quite at that 87 level, and so, we are seeing natural gas prices come off. a bearish number was expected, because after all, the five-year average was only for about 21 or 22 for a build there for an injection. this is the third week of injections season. we're in the shoulder season here. we're seeing mild weather. all of those factors bearish for natural gas prices. and of course, since january, erin, we've seen natural gas prices come down sharply from that $6 level, hovering right now around that $4 mark. back to you. >> thank you, sharon. and headlines at 7:32 on the west coast, 10:32 on the east. markets mixed. dow down just barely.
we have right now the s&p and nasdaq in positive territory. u.p.s., fedex and yum! brands leading the market higher on the u.p.s. and yum! earnings beats. shares of bailed-out bank citigroup trading over $5 for the first time since january 2009. and the imf confirms it will hold talks with greece on possible financial assistance on monday. thomson reuters reporting a 20% increase in global m&a activity in the first quarter of this year. we're looking at stocks that could be the next big target. oh, so that's where nesto's been. >> that's right. holding the beat. >> fill us in. >> thank you, mark. appreciate it very much. you know, so, we've definitely seen an increase in all kinds of different activity. if you look at the trends we're seeing here so far, we'll just say at the end of -- at this earnings season, the last month or so, we've seen a lot of deals in consumer names and a lot in the energy sector as well. but the sweet spot in terms of
the dollar amount or the market cap is on the small side still. not surprising. $1 billion to $5 billion is pretty much what we've seen in terms of the stock ticking up. now, we've seen both the return of private equity, the leverage buyout to some degree, and we've also seen strategic straight-out corporate acquisitions. it's interesting because the corporate acquisitions, because of the strength of the balance sheets and the amount of cash that companies that have been lean and mean have been able to horde, we're seeing cash as a component in the deals that are being announced, if not all cash, cash and/or some stock. and then as far as the companies being acquired, cash baby, it's all about cash. cash is king. so, i just picked my five favorite fables, and these are perennial, you know, stocks that have been in play and that have been talked about many, many times. palm clearly has been one to watch. and you know, not a day goes by without some sort of a write-up on it.
tivo. citigroup even came out with a note giving four reasons why they think it will merge with ecostar. harley-davidson. "washington post" is the most undervalued immediamedia play. and kodak. the s&p's up 3.5%. these stocks are up anywhere from 10% to 50%. so, let's get graded. david faber down in new orleans talking exclusively with one of the biggest players in the m&a word. david, take it away. >> thank you, matt. we're at the tulane corporate law institute, which is an enormous gathering each year, mostly for m&a lawyers, but a banker or two will also show up. and i'm very happy to have doug braunstein, head of investment banking at jpmorgan, who gave a presentation to a room full of m&a attorneys. >> good morning, david. >> good morning. you know, i'd love to start,
actually, not on mergers and acquisitions, but on the capital markets. you started your remarks there, and you said, "access to capital and the cost of capital has never been better." >> well, david, you know, it's interesting. i think you have to start when you're talking about m&a in where you're going to fund these transactions. and the truth of the matter is, 2009 was the record level of issuance, both in the u.s. and globally for equity, for high-grade debt, and most importantly, for high-yield debt. and as we come into the first quarter of 2010, that level of activity continues to be -- >> it kicked up, actually. >> actually, the first quarter in high yield was globally the largest issuance quarter on record. >> can this continue? and i ask that, of course, on our air constantly you'll hear talk of higher rates to come, potentially, talk of, well, the government is ultimately going to pull away a lot of the aid that has been provided to these financial markets.
if, in fact, both those things happen, where are the capital markets going to stand and what about that access to capital? >> well, you know, it's interesting. let me at least start with where rates are today, because i think that's an interesting benchmark because of where the cost of borrowing is today, whether it's high grade or it's high yield or noninvestment grade. cost of capital is also as close to the lowest levels it has been in history. so, the high grade index, for example, is at an all-time low. and what's remarkable is the size and liquidity pool and the ability to access that capital. so, where investors are today, what they're saying is, the risk profile from a fundamental economic standpoint is better. and we're taking our money that was in cash, in bank deposits and in money market funds, and we are moving it back into the markets. >> at least when interest rates were 0%, where else are you going to go?
you've got to chase yield to a certain extent. >> and that's the question. that's a relative question. and so, you know, the economists will make judgments as to where long-term interest rates are going to go and where inflation is going to go, but on a relative basis, right now, what the investors are saying is we like the relative return from the debt markets and the equity markets relative to putting that money on the sideline. >> and the spread between high yield and investment grade has also crashed from where it was, certainly, at the peak in 2008. give me some historical perspective. >> well, you know, we start with 2006-2007, that sort of peak from a -- >> some would call it a bubble. >> some would call it a bubble. and i think rates there got very, very -- risk premiums got very, very low, indeed. and risk premiums are wider today, but the absolute rates are lower. so, the aggregate cost of funding -- if you're a united states corporation today and you
want to go into the debt markets, your weighted average cost of capital is 100 to 150 basis points, 1 to 1.5 points lower than it was a year ago. >> right, which means that you probably are going to, if you need capital or even if you don't, maybe. >> well, i think for a lot of people, what they've done, and i think it's a great story for u.s. companies in terms of global competitiveness. what a lot of companies have done is they've gone and accessed those markets, they've lowered their cost of funding and then they've pushed their maturities. and so, they've extended the timeline from which they're going to have access to that capital. and in addition to that, their cash balances have grown dramatically. >> yeah, i mean, $1 trillion on the balance sheets of u.s. corporations. let's shift to m&a for the last minutes we have. what does that mean? we haven't seen a significant pace of deal-making this year, perhaps less than many people anticipated coming into the year. >> i think in fairness, the first part of the year is up
modestly, the first quarter is up about 15% globally from the last quarter of this year. and our expectation is that as the economy strengthens and this access to capital continues to be a vibrant driver of liquidity, and as you mentioned, mi $1 trillion of cash on corporate balance sheets, companies are going to start to put that to work. >> you think so? >> yes. >> but confidence, we talk so often about confidence in the corner office and the ceo. i would think they're feeling pretty good right now, but there doesn't seem to be signs, at least on announced deals, where they're ready to agree on a price with the seller or vice versa. >> to be fair, the cycle time of m&a deals from beginning to announcement is usually three to six months. and so, if you believe that this quarter is the beginning of a sense of growing optimism about the u.s. economy, then i think
our expectation is that it's really not until the third or the fourth quarter that you'll actually see deals announced. and the level of dialogue that we're experiencing, that early-stage discussion seems to indicate over the last month that that's the timeline that we're on. >> so, things, dialogue is picking up? >> the inquiry, the discussion, the actual announcements we think are three to six months away. >> right. doug, we have to leave it there. thank you. >> thank you very much, david. >> doug braunstein, head of investment banking with jpmorgan. i'll be back later with more guests. we're going to talk a lot more m&a today. back to you at the nyse. >> thank you, david faber. breaking news right now, the markets have all turned to positive territory. the dow is up almost two points, the nasdaq composite is up eight and change and the s&p is up, call it 1.4, 1.38 now. so, we've gotten back into positive territory. and we've got a secret sector coming up. >> can't wait. >> it's finally coming up. but stocks --
>> but, but -- >> yeah? >> if we do that, then it won't be a secret anymore. >> yes. it will no longer be a secret. we'll have to find more. >> all right. >> we're going to talk about a few stocks under just about everyone's radar that are really on the right track right now. before the break, natural gas after the inventory report. we've got crude still higher. natural gas, though, mark, continues to be lower. and we should emphasize, ceos we've been speaking to continue to say that for shale drilling in the united states to make sense, nat gas prices have to be closer to $7 or $8 and they are still only at $4. we'll be back.
cuomo's office in the alleged pay-for-play involving pension investments with a giant new york state pension fund, but specifically excluded from that suit is the co-founder steven rattner. more than that, quadrangle issuing a statement basically blasting its co-founder. "we wholly disavow the conduct engaged in by steven rattner, who hired the new york state comptroller's political consultant, hank morris, to arrange an investment from the new york state common retirement fund. that conduct was inappropriate, wrong and inethical." there are a number of reforms here that have been unveiled by cuomo, and yet, while quadrangle has settled with cuomo's office, its problems with the securities and exchange commission are not over yet. the s.e.c., which has also been involved in this probe, unveiling its own suit against quadrangle as this big pay-for-play scandal continues. mark? >> all right, thank you very much, sir. wait a minute, no. see, this is the thing. nesto didn't have other duties
because i just saw him! those are his other duties, i guess, mark. >> other stocks on the move right now -- nesto has other duties. we start in the oil patch. apache to acquire small oil and natural gas explorer mariner energy. $2.7 billion the price. the move extends apache's operations into deepwater gulf of mexico. capital one financial on the move after reporting a rise in u.s. credit card defaults in march. and the citigroup watch is on. the stock crossing $5 this morning. and, oh, now we're nicely above $5. $5.07. >> from stocks to stimulus dollars. the d.o.t. or the department of transportation, has handed out more than $10 million in recovery act funds as of the end of march. and mostly, that's paying for highway infrastructure projects used by commercial trucking and passenger cars. the d.o.t. has made nearly $38 billion available for states and
projects on roads, although, mark, i don't know, but i just wonder what it's like -- i mean, you know, certainly in our tri-state area, even in the tri-state area around washington, the pothole incidence is up, okay? >> yeah. a lot of potholes this year. >> and i don't know what's going on and i want to, you know, where's the money going? because the road experience has gotten worse. >> what, you don't believe the money's out there? it's out there. >> oh, i believe it's out there, i just don't know that it's necessarily going, you know, where people would want it to go. that's all i'm saying. i don't know. >> it's going somewhere where they can put up signs and slow you down because of their project. >> maybe it's digging new potholes so then they can be filled. from roads to freight carmakers. it's a small-cap group. look at the numbers from the recent february lows. freightcar america up 60%. trinity industries up 55%. greenbrier, american railcar
gaining more than 90% each. paul bogner with long bow research covers the sector. paul, these are great returns, but gee, i wish you had told us about them a year ago. >> yeah. it's had a pretty good run here on improving data from the railroads as well as some cars come out of storage, but you know, it was a tough run there for a while. >> well, are any of these still in what you would consider buy territory? >> yeah, we do. we think trinity's still the best in the idea of the space. based on one, the asset value of its lease fleet and two, that it is a diversified industrial and they are exposed to improving carload numbers, improving cars coming out of storage. in types of traffic where we're seeing the improvement, ethanol-based, grain-based traffic, things they're exposed, they're good on that side. >> so, we should buy them? >> on trinity, yeah, but the other names, we're concerned they've gotten overheated. yeah, we have a lot of rail cars
coming out of storage. problem is we have 25% of the fleet still in storage. normal levels with around 15%, 17%. so we still have a long way to go before we get a broad-based recovery. and given the kind of run-up we have seen, versed normalized levels, these are probably well away from that, two or three years away from the normalized levels. >> will there be any need to build more rail cars anywhere in the world? >> domestically, here, again, the grains side and some ethanol-related as well as maybe chemical cars, which would be tank cars, somewhat, but you know, beyond that, anything to do with housing-related, a lot of building products are still, you know, significantly overbuilt. so, we think there's still a long way to go there. >> all right. thanks very much. we appreciate it. there's your secret sector, mark. well, today is april 15th. by the way, i now know about four people who have their birthday on this day. >> bad day for a birthday. >> yes. yes, it is. but if you don't file your taxes by today, you could be going to jail. well, you could file an extension. file an extension.
>> to help you avoid that, cnbc has a 1:00 p.m. special "taxing america." we have tips to help you make the right choices. also this morning, vote in our street poll. what must be done to fix the u.s. tax system? we have proposed four different alternatives for you to vote on. flat tax, value-added tax, millionaires tax, upping the federal gasoline tax. you can vote at email@example.com. the results coming up in less than ten minutes. and -- i already did that.
i'm scott cohn in the cnbc newsroom on the legal front. the big tax evasion probe that had swiss authorities turning over hundreds of name. federal prosecutors in new york say seven people have been charged, all clients of ubs and two of those people will plead guilty. the individuals named today, kenneth heller charged in a criminal complaint and earnest vogliano all indicted and all
expected to plead guilty this morning. frederiquo hernandez and jewels robinson. as this probe continues, again, this was the look into tax evasion at suisse banks and it has caused a number of seismic changes in that area. tax day today a special cnpc report "taxing america." a summit focused on solutions. bill griffeth back to lead the efforts. bill, what's on the big shoe? >> we all know, mark, the crisis is evading but now we have to pay the tab. a number of proposals being talked about, all of them to raise some kind of a tax or another. a blue ribbon panel of corporate types, politicos to go over the number of proposals out there and try to come to a consensus by the end of the hour and the tea party rally shortly under way in washington and we'll talk to our own rick santelli who has been a part of that, if you
will, to get his view of where this movement is going and its impact on tax policy in this country. you guys have been highlighting our poll today of the different proposals out there. we want to hear from you, as well, during our hour of which of those proposals you feel is the most equitable to try to solve the budget crisis we have in this country right now. we will see you at 1:00 eastern time. guys? >> thank you, bill. >> you bet. and that is today, 1:00, as bill said. proving to be a very interesting conversation. >> and don't forget to vote in today's street poll. what's the best fix for the u.s. tax system? logon to squawkonthestreet.cnbc.com and there are your choices. we are back in two minutes.
millionaires tax or hiking the federal gasoline tax. >> nailed it. i told you flat tax would be the winner. . i'm not saying i would prefer that, but i knew that's the way our viewers would go. >> right. all right, don't forget our tax special on cnbc, 1:00 eastern in case you haven't been paying attention for the last 15 minutes. six in 60. zions bancorp. buffalo wild wings downgraded from neutral to buy. they're still delicious. illinois tool upgraded on bank of america merrill lynch. >> ww granger downgraded from a hold to buy. williams sonoma, they're optimistic about the recovery and citi above 5 and now it's really a fight because you're
allowed to short it and the big guys are allowed to buy it, so get in the ring and get your gloves on. >> gotta go, thanks for watching. see you tomorrow. welcome to "the call," everybody. i'm larry kudlow. trish regan is off. 90 minutes into there trading day stocks reversing earlier losses as they remain optimistic about a recovery. how to invest in a recovering economy. >> hello, larry. i'm melissa francis. charles schumer will join us on why he is introducing registration for carry-on luggage. we're bringing back spirit airlines ben baldanza. he started this whole issue, he will respond. >> my hero. >> this is "the call" on cnbc. stocks opened lower on some profit taking in a weaker than expected jobless report but came off its lows and comments from